Nasdaq takes the lead

JulieRannazzisi

NEW YORK (CBS.MW) -- Another rise in bond yields Wednesday did little to discourage the bulls on Wall Street, with money flowing into select big-cap names and pulling the major averages to higher ground.

Trading was breathtakingly volatile, with large price swings occurring on heavy volume.

Donald Selkin, chief market strategist at Joseph Gunnar, said some of the choppiness and high volume took place ahead of triple-witching on Friday. That's when futures contracts, options on stock indexes and options on single stocks expire.

"Some high-tech stocks did quite nicely. The market is climbing in spite of [falling] bonds. That tells you we can go higher," said Peter Cardillo, chief strategist at Westfalia Investments. Treasury prices fell to two-week lows after an unsuccessful attempt to improve early in the session following Tuesday's bloodbath.

The Dow Jones Industrial Average
DJIA, -1.24%
rose 65.15 points, or 0.6 percent, to 11,225.32. Gains in Microsoft, up 9 3/4 to 108 7/16 -- which set a fresh 52-week high of 108 3/4 -- and Intel, up 6 1/2 to 78 15/16, propelled the index. Other gainers included International Paper, up 1 9/16 to 55 7/8, and Alcoa, which reached a new 52-week high of 79 1/16 and ended up 4 5/16 to 79. The Nasdaq Composite
$compq
gained 50.29 points, or 1.4 percent, to 3,621.95. The Standard & Poor's 500 Index
SPX, -1.54%
added 0.7 percent while the Russell 2000 Index
RUT, -1.78%
of small-capitalization stocks dropped 0.3 percent.

Doug Myers, vice president of equity trading at Wachovia Securities, expects the market to trade sideways until year-end. But he expects more gains over the new year commences.

"If Y2K goes off without a hitch, you'll get [more] optimism in January," Myers added.

"Trading will be continue to be whippy in December. There will be a lot of action in [select] individual stocks while the averages will stay within established ranges," Selkin said.

Volume checked in at 1.03 billion shares on the Big Board and at 1.63 billion on the Nasdaq Stock Market. Breadth deteriorated with declining issues outnumbering advancing ones by 17 to 14 on the NYSE and by 24 to 18 on the Nasdaq. New lows set on the NYSE totaled 289 compared to 31 new highs.

Peter Green, technical strategist at Gruntal, believes the Nasdaq will be rangebound until year-end and expects the Dow to outperform. What could really hurt tech shares, he said, is a rise in bond yields to 6 1/2 percent -- an event he doesn't expect to materialize.

He also sees an improvement in cyclical stocks as the global economic recovery becomes more pronounced next year.

Selkin expects some nibbling in cyclical stocks but doesn't believe it will be enough to produce a full-fledged rotation. "We've seen several false starts in that group this year," he added.

Within the market, networking issues suffered as Cisco
CSCO, -4.02%
fell 2 1/16 to 95 7/8 on a 10-Q filing with the Securities and Exchange Commission.

The filing warned of slower sales growth in the future. However, analysts noted that the remarks represent a standard warning regularly issued by the company each quarter. See full story. In the filing, the company said gross margins decreased to 64.8 percent in the first quarter of 2000 from 65.5 percent in the same period last year due primarily to a continued shift in revenue mix towards lower-margin products and the continued pricing pressure seen from competitors in certain product areas. In addition, the networking giant said it expects that net sales may grow at a slower rate than experienced in previous periods.

The chip sector flexed its muscles, recovering following six straight sessions of losses, as the rose 3.0 percent. (See chart.) Software issues also managed advances thanks to a rosy earnings report from Oracle.

Other sectors ending in the winner's circle included the oil service group, gold stocks and the utilities. The bank and financial stocks, meanwhile, continued to struggle as bond prices retreated. Internet issues also retreated.

Bullish inventory numbers from the American Petroleum Institute fueled gains in crude oil, with the January contract up 63 cents to $26.36, lending support to oil shares. The API reported late Tuesday a 7.16 million barrel plunge in crude oil supplies for the week ended Dec. 10. See Futures Movers and see latest commodity prices.

In the bond market, prices gave back feeble gains posted out of the gate as Fed jitters continued to cripple the market.

The market, in fact, appears incapable of shrugging off concerns that the Fed may need to strike with a rate hike in the first quarter of next year to calm the vigorous U.S. economy. And as dealers unwind positions and close their books for year-end, it's unlikely that buyers will surface to support the government market in the next two weeks.

On the economic front, Wednesday saw the release of November industrial production, which rose 0.3 percent compared to expectations for a 0.2 percent rise. Capacity utilization came in at 81 percent compared to the projected 80.7 percent reading. See full story. In addition, October business inventories inched up 0.2 percent, less than the expected 0.4 percent rise.

Thursday will see the release of the weekly initial claims data as well as the October trade data, expected to show a deficit of $24.3 billion. In addition, the Philadelphia Fed index for December will be out. View and .

In specific issues, Oracle
ORCL, -1.42%
climbed 13 7/16, or 17.5 percent to 90 3/8. After the close of trading Tuesday, the company registered a profit of 26 cents a share compared to the First Call estimate of 22 cents a share and 19 cents in the year-ago period. The company also received a number of upgrades from analysts. See full story.

Shares of Exxon Mobil
XOM, -1.56%
rose 11/16 to 83 1/16. The company will cut almost 16,000 jobs by the end of 2002, an increase from the 9,000 cuts estimated when Exxon and Mobil announced their merger plans a year ago.

Meanwhile, Verity
VRTY, -45.36%
shares plunged 22 7/8, or 46.7 percent, to 26 1/8 after reporting disappointing earnings Tuesday. The company earned 9 cents per share in its second quarter compared to analysts' expectations for a profit of 12 cents per share and earnings of 18 cents in the same period last year. See Screamers.

Shares of Boeing
BA, -0.84%
added 1/4 to 38 3/4. The company received $11.6 billion in new orders, including an order of 20 airplanes from General Electric's Capital Aviation Services valued at $2.6 billion.

Nortel Networks
nt
rose 9/16 to 88 5/8. The Canadian company is purchasing privately-held Qtera Corp. for $3.25 billion in stock.

Shares of E-Stamp
estm
jumped 3 25/32, or 14.1 percent, to 30 17/32 after the company said it will be the exclusive provider of Internet postage in selected Microsoft small-business Web sites.

ExciteAtHome added 1 1/4 to 50 3/16. The company is discussing a strategic alliance with Microsoft
MSFT, -1.70%
aimed at accelerating the development of enhanced television services for set-top boxes and other devices. See full story. Separately, Microsoft has released Windows 2000 to manufacturing, which will be generally available on Feb. 17. See Software Report.

Time Warner
TWX, -0.30%
fell 1/16 to 66 7/16. The company said it's setting up a $500 million fund to invest in digital media companies. See story.

Shares of Motorola
MSI, -1.20%
put on 10 13/16, or 9.1 percent, to 130 3/16. SoundView Technology started coverage of the company with a "strong buy" rating and a $175 price target.

Shares of CMGI
cmgi
fell 6 to 199 3/4. The company said it's purchasing online direct marketer Yesmail.com in an all-stock deal. CMGI is paying more than $500 million in stock for Yesmail.com based on recent prices on Wednesday. See full story. After the close of trading, the Internet incubator posted a first quarter loss of $1.08 per share, beating the First Call estimate, which anticipated a loss of $1.76 a share. The company also announced a 2-for-1 stock split. Shares surged 28 9/16 to 228 5/16 in Instinet trading after the closing bell.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information.
All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only.
Intraday data delayed at least 15 minutes or per exchange requirements.